Suppose that a computer memory chip costs 600 yen in Japan and $3 in the United States and that the exchange rate was 250 yen/$.In this situation traders would ________ increasing the ________ and causing the dollar to ________.

Question

Quizplus · Accepted Answer

In this situation, traders would buy chips in Japan because they are cheaper there. This would increase the supply of dollars in Japan and decrease the supply of dollars in the United States. This would cause the dollar to weaken against the yen.

Suppose That a Computer Memory Chip Costs 600 Yen in Japan